Cremation, Finance, Preneed

SCI settles “Deceptive sales” lawsuit for $209 million

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Service Corporation International (SCI) has agreed to provide up to $209 million in refunds to settle a federal class-action lawsuit alleging it deceived 87,000 Florida customers who purchased its prepaid plans according to this article from last week from Yahoo News.

According to the article SCI Direct (formerly called Neptune Society Management Corporation) was named as co-defendant in the class-action suit originally filed by West Palm Beach senior Nancy Taylor in April 2020 in U.S. District Court in Fort Lauderdale.

Again according to the article, the settlement reached indicates that refunds will be “made available” to all Florida consumers who purchased Neptune Society’s pre-need funeral agreements, transportation and relocation protection plans, and related retail merchandise agreements since April 1, 2016.  It also appears that to get a refund, the client must request to do so.

The settlement pertains to about 87,000 preneed customers who paid an average of about $ 2400 each for services that included pre-need funeral agreements, transportation and relocation protection plans, and related retail merchandise agreements since April 1, 2016.

A statement attributed to SCI in the article said this, “While we strongly maintain there was no wrongdoing on Neptune’s behalf, in an effort to move forward and continue our full focus on serving our families, we agreed to settle the remaining disputes.”

Funeral Director Daily:  I’ve known about this lawsuit but certainly don’t pretend to know all the ins and outs of the case.  However, to me it appears that the law that was allegedly broken by SCI was a Florida law that says 70% of all preneed monies must be held in trust.  The issue in this case, I believe was that Neptune issued two contracts — one for the merchandise the preneed client received such as an urn, a keepsake plaque, a memory chest, and more.  The second contract was actually for the cremation and related services.

It appears to me that Neptune “delivered” the merchandise in the first contract and kept that money and then trusted the money from the 2nd contract.  Doing so, the lawsuit alleged, trusted less than the 70% required by Florida law.  The Yahoo article mentions that the lawsuit then alleged “As a result of the “bookkeeping sleight-of-hand,” the companies placed in trust “barely 50%” of the amount they otherwise would have been required to place in trust, increasing their “cash flow and bottom line.”

Tom Anderson
Funeral Director Daily

Again, just my point of view, but the case boils down to somewhat semantics as to whether or not the preneed client received everything they were promised.  I’m guessing that they did or will, but some may have an urn on hand for 1o,15, or 20 years before it is ever needed.  One could make the argument that it is a “used” urn by the time it is needed.  I see a similarity where some cemeteries “sink” a vault into the ground with the cover on many years before needed in order to access the cash that was paid for it earlier rather than wait for the preneed policy to mature with a death.  I’ve often thought that by the time it is used for its purpose of “protecting the remains” it is a “used” vault.  And, the preneed client did not pay to be interred into a “used” vault.

I’m a fan of Super Bowl winning coach and football commentator Tony Dungy.  As a matter of fact, we attended the University of Minnesota at the same time where he was the star quarterback and I was a struggling mortuary science student.  I also use his “Uncommon Life Daily Challenge” as one of my daily scripture readings.  It just so happens that in writing this article, Coach Dungy’s message on September 17 came back to me.  He mentions remembering what his mother told him about many situations and is glad he has generally followed her advice about taking shortcuts.  That advice was and is:

“It’s sometimes easier to do the wrong thing, but it is always better to do the right thing”.

I think of that when I think of preneed.  For many businesses with struggling cash-flows there can be a great temptation with those preneed funds, even in a legal way to “work around” the law by pre-sinking vaults and such.  However, at least in my opinion, your clients are expecting the “right thing” and the money being put into trust (or insurance) so that their services and merchandise can be paid for at the time it is needed.

Finally, according to the Yahoo article, a statement from Service Corporation International said this about the settlement, “Based in part on our customer surveys and because we don’t believe any of our customers were deceived, we are confident that our customers value our products and services and do not believe there will be a material number of cancellations. We stand behind our products and services and are honored by the continued loyalty our customers have shown us.”

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One Comment

  1. Neptune is doing the same thing in Minnesota. Families don’t understand.

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